Purchase Order Financing and Letters of Credit

A significantly large order is about to be placed. This could be the break that will help spark your company’s growth. The important question to ask then is do you have the working capital to actually fulfill this order? If your cash reserves aren’t enough to resolve this issue, we invite you to consider purchase order financing.

How Purchase Order Financing Works

This is a kind of financing that businesses can quickly rely on to accomplish a particularly large transaction. Cash flow problems can stem from the fact that suppliers often demand cash on delivery, or in the case of import / export payment prior to shipping, while customers tend to prefer delayed or staggered payment terms. Businesses with inadequate cash reserves may have to unfortunately decline a notably profitable order. With purchase order financing, you don’t have to miss such an opportunity.

Purchase order financing approval is based on your customer’s credit record. Letters of credit are then provided for the supplier end of the chain. This makes sure you receive the raw materials or finished products needed to complete the order. Just like any other type of loan, there will be a minimum required loan amount and interest will be applied. The later may be taken from the resulting profit of the transaction.

Benefits of Purchase Order Financing

We strive to fully understand our client’s operations and capital requirements. By providing you with the means to successfully accomplish the purchase order, we are essentially taking on the risk of either your customers or suppliers not fulfilling their parts of the bargain. As your financial partner we will do our best to guarantee the success of the transaction.

Since purchase order financing follows a different set of approval criteria, the process is comparatively faster and easier than the usual bank loan. We know about the commonly short time frame of purchase orders and understand how the well-timed delivery of products and services can be critical. You don’t have to turn down orders or make your customers wait when you’re armed with this quick financing option.

Another advantage of purchase order financing is that you don’t even have to acquire bank debts or sell equity to obtain the capital needed to fund your purchases. The proper use of purchase order financing can give you the capital needed to increase your market share, make larger profits by fulfilling larger orders and maintain a positive cash flow.